Indian outsourcing theme durable for long-term: Robert Parker, Credit Suisse

SINGAPORE/NEW DELHI: Expressing confidence on the outsourcing theme, Robert Parker, Senior Advisor, Credit Suisse told ET Now that it is durable for the Indian economy in the long-term. However, he felt that the Indian IT companies will feel the pressure of a global downturn in the short term.

With major clients for the Indian IT services sector coming from the European and US financial sector, Parker thinks that the flow of activity and deals will be less, which in turn will impact the volumes and profitability on the downside.

Asked about his outlook for corporate earnings in India, Parker said that with a weak global economy the results will be 'poor' and may even be worse than the previous quarter. On the contrary, with the rupee weakening and commodity prices coming down globally, he feels that export oriented companies may benefit.

With the twin problems of high inflation and weak economic growth, Parker said that the monetary policy decisions in India are extremely tough. He sees inflation in India easing and coming down in the second half of the year. Parker also feels that with both inflation and global commodity prices dipping, the problems of the Reserve Bank of India ( RBI) should ease.

Commenting on the current turbulence in the global equity markets, Parker said that he expects an improvement in August. Apart from some volatility in September, he thinks that global equities will finish the year much higher than the current levels. " Emerging markets, especially India are underinvested in," he added.

The bank is long on the energy sector globally and in the Indian context Parker said that the focus will be on reduction in subsidies. "With subsidies being reduced, prices at the pump will go up, which will impact demand and therefore the companies," he said.